Personal Hearing Mandatory prior to Issuance of Order u/s 148A(d) of IT Act: Kerala HC dismisses Revenue Appeal against Co-Op Society [Read Order]

A Division Bench of the Kerala High Court has ruled that providing a personal hearing is compulsory before issuing an order under Section 148A(d) of the Income Tax Act. The Revenue appealed against the judgment of the Single Judge to the Division Bench. As the impugned judgment contains a detailed account of the petitioner’s case, the Bench decided not to repeat those details in this judgment since the Revenue’s appeal was very specific.

The jurisdictional officer issued a notice for assessment reopening and demand to the petitioner. The petitioner argued that the order was made without giving them a chance to be heard, as required by Section 148A(b) of the Income Tax Act. The petitioner contended that the order was flawed due to the lack of adherence to the principles of natural justice, thus rendering the Show Cause Notice invalid as well.

The Single Judge determined that since Section 148A of the IT Act mandates providing the assessee with an opportunity to be heard, the absence of a personal hearing invalidated the contested orders and subsequent notices. Consequently, the said order and notice were annulled, and the writ petitioner was instructed to appear before the appellant by January 15, 2024, with all pertinent documents for a hearing. It was explicitly stated that if the petitioner failed to appear on January 15, 2024, no further opportunities would be granted by the Income Tax Officer. P G Jayashankar, the Standing Counsel for the appellant, and V P Narayanan, the learned counsel for the respondent/writ petitioner, were involved in the case. The appellant’s grievance was limited to the Single Judge’s ruling that personal hearing is mandatory in an inquiry under Section 148A(b) of the IT Act.

The standing counsel for the appellant, P G Jayasankar, argued that given the nature of the proceedings, the statutory scheme, and the wording of the provisions, the assessee is not required to be given a personal hearing before issuing an order under Section 148A(d) of the Income Tax Act. Recently, the question of whether providing a personal hearing to the assessee is mandatory in an inquiry under Section 148A(b) of the IT Act was deliberated upon by the Division Bench of this Court in the case of Income Tax Officer v. Asamannoor Service Co-operative Bank Limited.

The Bench concluded that Section 148A of the IT Act necessitates granting the assessee an opportunity to be heard, including the right to a personal hearing. Justices Kauser Edappagath and A K Jayasankaran Nambiar held that the dictum laid down in the aforementioned judgment directly applies to the facts of this case. Consequently, they found no merit in the appeal and dismissed the Writ Appeal for lacking merit.

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